Cities and Local Government Devolution Bill [HL]

Lord McKenzie of Luton Excerpts

Monday 8th June 2015 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the noble Baroness, Lady Williams, for her clear introduction of the Bill and for facilitating our briefing meeting last week. It is a short Bill—just 14 clauses—which of itself devolves nothing, but its framework lays the groundwork for outcomes that could be of great constitutional significance. I say “could” because it depends on how the raft of powers in the Bill that accrue to the Secretary of State are deployed in practice. It also depends on the appetite and capacity of local authorities to engage.

As it stands, the Bill is a blank canvas. As we have heard, it could, with agreement, include devolution to a combined authority of seemingly any local authority function and any public authority function—including that of Ministers and government departments—exercisable in relation to the authority’s area. It could involve the conferring of a general power of competence on the combined authority. Further, as we heard, it enables changes by regulation to the constitution, membership, structure and boundaries of local authorities for devolution deals where a combined authority might not be appropriate.

We support the boundaries of this framework, but our task in Committee will be to probe the Government’s approach and the extent and manner in which it is intended these considerable powers be implemented and over what timescale. But we also recognise that it is not just about government; it is for local authorities, in the words of the City Growth Commission,

“to raise their game, building governance, policymaking and evaluation capacity”,

and to develop their own vision for their areas.

We know that there are compelling reasons why we should support and encourage the devolution of greater powers and funding away from the centre and towards local authorities and communities. This agenda is not new. It has long been recognised that we have a high degree of centralisation in our system of government which is stifling initiative and creativity and holding back growth and regeneration. There have been a range of policies and initiatives over the years which have sought to address this in one way or another: UDCs, City Challenge, New Deal for Communities, RDAs, LEPs and the regional growth fund. We welcome the fact that the architects of some of these are with us this afternoon. However, the economic imperative—the need to enhance and sustain growth and reconfigure and join up services in the face of more cuts—and the democratic benefit which can flow from people having more power in their localities and communities require us to now address the benefits of devolution on a more profound and sustained basis.

Discussion hitherto has generated the concern that the Government’s focus in practice was only for devolution to our major northern cities—the city regions or metros. This is a debate driven very much by the City Growth Commission, which has recognised their potential to harness the benefits of agglomeration, connectivity and improved governance. It points to the success of London although, as we know from the London Councils briefing, London councils are seeking, not unreasonably, further devolution themselves.

We support the devolution of powers to great cities such as Manchester, Leeds, Sheffield and Liverpool, and not just because these are Labour led. We want to see devolution to every part of the country, not just to other cities or metros but to counties as well—not just to Tyne and Wear and the East Midlands but to Bristol, Southampton, Norfolk and Norwich—and not just to urban areas but to rural and coastal areas, too. The Bill as it stands enables this wider devolution and has been welcomed by a number of commentators, including the LGA. As I have said, it has our broad support, although we will want to see what this means in practice.

The wide scope of the Bill raises the question of how it is potentially to be delivered. There are currently five combined authorities and suggestions that there is active consideration of four more, covering Derbyshire, Nottinghamshire, the Tees Valley and Birmingham and the Black Country. The Bill is likely to whet the appetite of others, and we hope that it does. We have no idea, of course, how many proposals might emerge under Clause 10. Obviously, this cannot all be done at once, but perhaps the Minister will tell us what the strategy for delivery is and reassure us that it will not be a piecemeal approach. Presumably, progress does not rest just on who catches the Chancellor’s eye. Is there any presumption of metros first? How will the Government seek to ensure that counties in particular do not fall behind?

We should take the opportunity today to congratulate Greater Manchester on its innovative agreement with the Treasury. The 10 local authorities involved have a long record of collaboration, characterised by consistent leadership and hard work. That work has delivered the opportunity of a range of powers over a housing investment fund, transport, business support, strategic planning skills, complex dependency, the Work Programme and opportunities to integrate health and social care across the combined authority area—the tools needed to develop programmes that address local needs and develop a new “place-based” partnership with government.

We support the devolution and integration of health and care services but recognise from the MoU attached to the Manchester agreement that the issues are not straightforward. We would not want to see a disruptive structural reorganisation and are cautious about some areas such as workforce planning, research and commissioning of specialised services. There is also a need to test where the buck ultimately stops in the event of major disruption to services—with the Secretary of State or with the combined authority. We need also to be mindful of the briefing, received just today, by the RCN.

As we have heard, the Bill also enables for the first time a combined authority to have an elected mayor who by virtue of that office chairs the combined authority, and with an obligation to appoint a deputy. The Secretary of State can by order require that any function of the combined authority can be carried out only by the mayor, and to these can be added the role of the PCC. We will express our concerns that this could lead to a very substantial concentration of power in the hands of one individual—mandatory scrutiny arrangements notwithstanding—and we will take time in Committee to probe the potential boundaries of these arrangements.

The position of elected mayor still requires some clarification from the Minister, our earlier exchange at Questions notwithstanding. I think we are clear that the Bill does not appear to make it a precondition that the combined authority must have an elected mayor in order to gain the additional functions covered in the draft legislation, yet the rhetoric of Ministers, particularly the Chancellor, has suggested otherwise. He said in a recent speech:

“So with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone. But nor will I settle for less”.

We acknowledge the importance of clear leadership and accountability in driving through reforms to stimulate economic growth but question why there should be only one acceptable leadership model.

At our briefing meeting, the Minister suggested that matters might be more flexible than this. To an extent she has confirmed that again today, but can we have it on the record that a city region can have the powers under the Bill without having an elected mayor? What about the existing combined authorities? Does the Minister accept that, given that all bar one of the cities holding a compulsory referendum last time rejected elected mayors, the insistence on having one could be a barrier to the devolution process? Of course, once the position of elected mayor is accepted, there is no going back. The prospect of an elected mayor taking on some or all of the duties of a PCC would seem to be an admission of failure. Where does that leave situations where the boundaries of the combined authority and the remit of the PCC are not co-terminous?

The opportunities and challenges that the Bill presents will be heavily dependent on funding arrangements, not only the specific arrangements for individual deals but the continuing underlying funding for local government. I do not propose today to revisit the sorry saga of unfair cuts visited by the previous Government—a coalition of Tories and Lib Dems, we should recognise —on our most deprived communities, which we know are to continue, except to say that devolution must not be a cynical route to unloading responsibilities on local authorities without proper funding. Of course, the previous Government have history on this. The Bill provides, as we heard, for levying powers of a combined authority except for mayoral functions, in respect of which a combined authority becomes a precepting authority. This would appear to lead to situations where the same function is funded differently, depending on whether or not it is a mayoral function. We will look to better understand the consequences of this in Committee.

There is no general provision in the Bill whereby sources of revenue accrue directly to local authorities as part of a devolution process, so far as I can see. In formulating our plans, we have proposed the retention of all business rate growth but it looks from the Manchester agreement that these matters will be negotiated on a case-by-case basis. In his No Stone Unturned: In Pursuit of Growth report, the noble Lord, Lord Heseltine, cautioned against what he called the “penny packets” approach to devolution—that is,

“Parcels of cash attached to specific projects, each with their own particular objectives, timetable and requirements”.

Does the Minister accept this caution and can she tell us what the Government’s approach is in this regard? What is the size of their ambition and what is the measure of central public authority funding potentially available in this Parliament? Indeed, what funding streams are available?

Time marches on. There is much else for Committee, including mandatory scrutiny, which we support; the electoral process for elected mayors, which seems to have absorbed the drafters of the Bill; and the level of parliamentary scrutiny. But the Bill opens up huge opportunities and we will play our part in encouraging local government to take maximum advantage.